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Cummins's overseas growth engines sputter

SAN FRANCISCO (MarketWatch) -- Cummins, the Indiana-based truck engine maker, cut its revenue outlook Tuesday, providing a somber blueprint for a whole raft of second-quarter reports from the industrial heartland.

In a short, matter-of-fact news release, Cummins said the 10% sales growth it had expected in 2012 simply isn't happening. So they dialed back expectations, predicting that second-quarter sales would come in at $4.45 billion, or roughly the same as in 2011. Read about Cummins's revised sales outlook.

It was a cruel blow to Cummins's (CMI) share price, which tumbled 9% on the news. Clearly, a lot of investors didn't see this one coming.

The problem, according to Cummins, is not just an obviously sluggish U.S. economy, but dashed hopes in Brazil, China and India, three huge markets where the CEO and Chairman Tom Linebarger said demand "is not improving as we had previously expected."

These three nations have been bolstering U.S. manufacturers' sales for years, providing growth opportunities not seen in this country for decades. But globalization makes them just as susceptible to a world-wide slowdown as anyone else.

Extolled as economic engines that could somehow keep powering ahead even when the "old" economies of Europe and the United States stalled, these three so-called BRIC nations were simply unable to sustain the blistering pace of their own economic expansion. It's a grim warning for any company -- and there are many -- that had hoped somewhere, somehow, the party could last a few more years.

But that still leaves the fourth BRIC, Russia, whose gross domestic product has been growing at a relatively steady 4% to 5% over the past year.

Cummins makes no mention of Russia in its warning. Perhaps because, unlike Brazil, India and China, it lists no manufacturing facilities there and maintains a rather slim presence on the sales side.

Time to crank up that Moscow sales office? The timing could be fantastic. After 18 years of wrangling, Russian lawmakers on Tuesday finally ratified their nation's entry to the World Trade Organization. Read about Russia's WTO vote.

With a little luck, that will make it easier for U.S. heavy equipment manufacturers such as Cummins to get a piece of the action in Russia's massive energy and mining industries.

Hey, it's worth a shot, even if it's a long shot. And there aren't a lot of other targets stirring out there.

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